Circular letter on the mobility allowance and the consequences of the Constitutional Court Judgement

As described in our newsflash of 23 January 2020, the mobility allowance, better known as the Cash for Cars-system, has been annulled by the Constitutional Court (23 January 2020, published in the Official Gazette on 24 February 2020). Now, the Belgian Tax Authorities have published a short Circular letter clarifying the impact of this annulment and what it means in practice.

As from 24 February 2020 the following will be applicable :

An employer can no longer implement the regime of the mobility allowance

An employee can no longer request to step into this regime

An employer can no longer approve such requests

Any payments made in the framework of the mobility allowance for someone who entered into this system after 24 February 2020 will be considered as regular salary payments.

People who have opted for the mobility allowance prior to 24 February 2020 have the option to continue this regime until the end of this year. As from next year, any cash allowance granted to these employees will be treated as any other regular cash payment (subject to regular taxes and social security charges). If an employer also offers access to the system of the mobility budget, an employee (who previously received mobility allowances) can choose to enroll in this regime but this will need to be done before year end to continue the special social security and tax treatment foreseen by law.

It is still to be seen whether the legislator will foresee alternative legislation or further transitional measures before the end of this year.